Featured

ZONING BEING A FUNCTION OF NIGERIAN SYSTEM, IS CONSTITUTIONAL

Published

3 years ago

February 17, 2022

By Jeff Ejiofor

According to Alhaji Tanko Yakassi, a northern leader and former Liaison Officer to Late President Aliyu Usman Shehu Shagari, for Nigeria to enjoy political stability, unity across the country and a sense of equity, the presidency and other key national offices should be rotated and shared among the country’s geo-political zones. From this statement of fact credited to a renowned elder statesman of northern extraction, it is implicitly clear that the word zoning did not evolve in the lexicon of Nigerian political dictionary today. It is basically as old as Nigeria, especially its presidential democracy which started in 1979 during the second republic.

In fact, political zoning was first introduced in Nigeria by the then National Party of Nigeria, NPN, which we all know, was the first political party that was accepted nationwide in Nigeria as everybody’s party. No individual or a group of Nigerians ever allocated to themselves the ownership of NPN. Everybody was a joint owner of the party. It was because of that, that NPN thought of developing the concept of zoning in order to assure every member and every segment of Nigeria that the exotic office of the president would one day rotate to their area or zone.

Apparently, that was the reason the idea of zoning kept coming up in all political conferences that took place after NPN, and has been adopted by some conferences as a provision in the Nigerian Constitution. Under Late Gen. Sani Abacha’s constitutional conference of 1994/1995, it was recommended, and the military accepted that it should be incorporated into the constitution of Nigeria, but in a way that it will form the basis of registration criteria for every political party. Unfortunately, Abacha died in 1998 and the reforms died with him, making the realisation of the concept as a constitutional matter abortive.

However, since then, the majority of Nigerians have accepted zoning as a very good strategy that will give everybody in Nigeria a sense of belonging.Those who are able to get the position to their side will be satisfied and acknowledged and those who have yet to get it, were assured that they will get it when the time comes. So, now you cannot separate zoning from rotation, because zoning without rotation is meaningless. Whoever adopts zoning automatically adopts rotation, and whoever rejects zoning, automatically rejects rotation.

For those who hold draconian views about merit being the exclusive right of certain persons or group of persons, they should know that there is no part of Nigeria today that competent people are not found. It is undisputable that every local government in Nigeria today has competent and qualified Nigerians to seek any public office, be it elective or appointive. So, the issue of using merit or competence to de-market zoning is baseless and mischievous.

Those who on the other hand, query the constitutionality of zoning are either insincere or ignorant of the realities of Nigerian system. Such people should tell us what quota system is all about. Let them tell us what the federal character principle is doing in our system.They should also interpret the Schedule 3 of Nigerian constitution which states that political offices should be shared among the component units of the country in such a way that every part is evenly represented at all times. It is indeed lack of in-depth understanding that anybody will regard zoning as unconstitutional. In short, metaphorically speaking, zoning is constitutional and has abinitio been practised in Nigeria.

As a result of the above reality, in1999 when the whistle for the third republic political activities was blown, Nigerians were quick to resurrect the issue of zoning and it became the most popular slogan in the country’s political parlance. Across the length and breath of Nigeria, the issue of zoning became a matter of political exigency synonymous with justice, equity and fairness. Proposal for its adoption was practically seen as the only suiting balm to settle the protracted political impasse precipitated by the annulment of June 12 presidential election presumably won by Late Chief MKO Abiola.

Recall that Chief Abiola died in the custody of Nigerian government while struggling to reclaim his mandate. As a matter of fact, zoning which was seen by most Nigerians as the only vehicle for political justice where the right of every Nigerian will be protected, became generally acceptable. It came to the rescue and eventually pulled Nigeria out of the precipice and doldrums of political quagmire, part of which was the zoning of presidency to the South West by the two major political parties with a view to pacifying them for the injustice of June 12,1993.

Expectedly, Enugu State, being one of the prominent states in Nigeria, saw the need to align with the generality of Nigerians whose states have embraced zoning anchored on political justice and sense of belonging. Enugu keyed into the zoning policy which is regarded as the most politically expedient practice in Nigeria capable of ensuring peace and stability where everybody is happy.

In pursuance of this noble objective, the elders of the state at that time, bearing in mind the bitter political rivalry always occasioned by free for all fight politics as was the case between Dr.Joe Nwodo and Senator Hyde Onuaguluchi in the 3rd republic, decided to reach a gentleman understanding on a power sharing formula among the existing three senatorial political structure of the state.Though it was more prominent in the ruling People’s Democratic Party, all other political groups that tried to thwart the arrangement were met with stiff resistance by Ndi Enugu who roundly rejected them at the polls for trying to usurp justice and equity charter of the people.

It honestly beats my imagination to see people seeking to destroy a lofty policy carefully contrived to ensure justice in the system. It beats my imagination that people can exhibit such significant sign of short memory to the point of attempting to reverse the hand of the clock for primitive personal aggrandizement. I am dumbfounded that after seeing the endless political turmoils in states that refused to practise zoning, some people, out of sheer greed can still wish their home states such an ugly experience. I never imagined that any right thinking citizen of any Nigerian state can advocate free for all fight politics in any part of Nigeria. Above all, I did not believe before now that any Enugu man can work against zoning which has brought peaceful and seamless transition of power in Enugu State.

In conclusion, my candid advice is that people should desist from insulting the sensibilities of others in their subtle bid to destroy a well established political principle, norm and tradition of Enugu people. Zoning has always been a part and parcel of Nigerian system and did not start today. Let nobody, because of ill acquired public wealth, arrogate to himself a leviathan political status in a state collectively owned by over 4 million people. Enugu State belongs to all of us and the political tranquility achieved by our amiable and peace loving Governor, Rt Hon Dr Ifeanyi Lawrence Ugwuanyi should not be taken for granted.
A stitch in time saves nine.

Enugu is in the hands of God

Share on Facebook

Business

Tinubu’s People-Centric Tax Reforms and Ndume’s Threat

Published

4 days ago

November 10, 2024

The Gleamer

By Sunday Dare

“We cannot continue to tax poverty when we are supposed to promote prosperity” – President Bola Ahmed Tinubu

Senator Alli Ndume. Controversial. Outspoken, brilliant and engaging. Of all his attributes I did not find a place for ‘willful ignorance’ as one of his attributes or did I miss something? His Channels Television Interview was at once interesting and absurd coming from a person of his status : ranking Senator of the Federal Republic.

If his attack of Tinubu Tax Bills now before the Parliament was understandable, his open admission that he has not read the Tax bill he was so vehemently opposed to is unpardonable.

In plain sight Senator Ndume displayed his ignorance. That ignorance will be best cured by facts and not bluster. The Tax bill is not dead on arrival. The tax bill is well and alive and that is why we are having this conversation.

Despite the consensus that a fair, equitable and business-friendly taxation regime is pivotal to Nigeria’s drive for economic growth and sustainable development, the requisite will to pursue the reforms needed for achieving this has, unfortunately, either not been there on the part of the leadership, or where efforts have been made, it has not produced significant results. Nigeria has consistently ranked as one of the countries with the lowest revenue-to-GDP ratios in the world, which, according to Il Jung, “makes its fiscal position vulnerable to shocks”.
This from the IMF staff who prepared Nigeria’s revenue mobilisation report 2023. President Tinubu understands this clearly.

Such is the situation that “general government revenue in Nigeria was 7.3 percent of GDP for 2021—less than half of the average in countries belonging to the Economic Community of West African States (ECOWAS) and nearly a third of the average of countries in Sub-Saharan Africa (SSA)—and ranked as 191st out of 193 countries in the world.”

At 9.4% in 2023, Nigeria’s tax revenue to GDP ratio was not only among the lowest in the world but also on the continent, according to Axel Schimmelpfennig, the IMF mission Chief for Nigeria. To Il Jung, “Nigeria’s low tax revenue has been mainly driven by the narrow bases of its indirect taxes, low tax compliance, large amount of tax exemptions as well as low rates. Tax compliance and tax morale are still very low. Nigeria’s VAT collection efficiency (C-efficiency ratio)—the ratio of actual revenues to potential revenue—is the lowest among peer African countries.” The result is “…that the government has too few resources for social and development spending on health, on education, on infrastructure, etc.,” Schimmelpfennig says.

This age-long challenge of narrow revenue base, huge debt burden and high demand for social and development spending, which successive administrations have been confronted with, is what President Bola Ahmed Tinubu decided to tackle head-long through a Root Cause Analysis in order to identify and resolve underlying issues in Nigeria’s tax system to enable it proffer appropriate solutions. President Tinubu had been upfront about tackling this challenge before assuming office, and in his inauguration speech, he assured local and foreign investors that his “government shall review all their complaints about multiple taxations and various anti-investment inhibitions.”

Less than 2 months in office, he announced the setting up of the Presidential Committee on fiscal policy and tax reforms, headed by former Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers, Taiwo Oyedele, comprising of experts from both the private and public sectors to undertake comprehensive law reforms, fiscal policy design and coordination, harmonization of taxes, and revenue administration. At the inauguration of the committee in August last year, the President restated his commitment to reforms to ensure a more enabling environment and relief for small businesses and those at the bottom of the pyramid. “We cannot continue to tax poverty when we are supposed to promote prosperity,” he said.

The President’s vision and clear mandate is evident in what the Fiscal policy and tax reforms Committee delivered as recommendations to the government, and became a part of the Economic Stabilisation Bills (ESB) approved by the Federal Executive Council in September, as part of the Accelerated Stability and Advancement Plan (ASAP) of the government. The ESB which seeks to amend about 15 different tax, fiscal, and establishment laws to facilitate economic stability and set the country on the path for sustained inclusive growth, has as some of its objectives: inflation reduction and price stability; complementing monetary policy measures with appropriate fiscal interventions to strengthen the naira and sustain exchange rates convergence; promotion of fiscal discipline and consolidation; enhancement of job creation and poverty alleviation; as well as export promotion and diversification.

It was in furtherance to a realisation of these objectives that President Bola Tinubu sent a letter to the 2 chambers of the National Assembly, requesting for the approval of 4 tax reform bills, which are: “The Nigeria Revenue Service (Establishment) Bill”, “The Nigeria Tax Bill”, “The Nigeria Tax Administration Bill,” and “The Joint Revenue Board (Establishment) Bill.” These Bills seek to provide a consolidated fiscal framework for taxation in Nigeria, a clear and concise legal framework for the fair, consistent and efficient administration of all the tax laws to facilitate ease of tax compliance, reduce tax disputes and optimize revenue, among others.

While investors and the business community have welcomed this development, there has been a pushback from some quarters from those who have apparently not familiarised themselves with the contents of the Bills. The concern by the Northern Governors Forum about the proposed amendment in one of the bills is the distribution model for Value Added Tax (VAT) which has been addressed by Mr Taiwo Oyedele, Chairman of the Fiscal Reforms Committee. He assured them that the aim of the proposal is “to create a fairer system by devising a different form of derivation which takes into account the place of supply or consumption for relevant goods and services whether they are zero rated, exempt or taxable at the standard rate”.

The surprise, though, is the response from Senator Ali Ndume who has declared that the bills “will be dead on arrival”, even as he confessed that he is yet to read the bills, which we presume should be available to him, having been received by the National Assembly, as the Senate President announced on the floor of the Senate. I refuse to believe that any Senator, and definitely not one of Senator Ndume’s standing will say, “We don’t need to study the bill”, as he was quoted to have said. Senator Ndume can’t be that flippant, as the legislative business is serious business.

For the benefit of Senator Ndume and others who might be of the mind that they do not need to study a document before speaking to it, here are some of the changes proposed in the bills:

1.Changes to the income tax laws to facilitate remote work opportunities for Nigerians in Nigeria within the global business process outsourcing. This will empower our youths to play a key role in the digital economy space.
2.Zero rated VAT and other incentives to promote exports in goods, services, and intellectual property.
3.Tax exemptions for small businesses including WHT, VAT, and 0% CIT.
4.Exemption from personal income tax for minimum wage earners and reduced tax burden for over 90% of private and public sector workers
5.VAT at 0% for food, education, health, and exemption for rent and public transportation. These items constitute an average of 82% of household consumption and nearly 100% for low-income households to ameliorate the rising cost of living for the masses.
6.Introduction of the Tax Ombudsman to advocate for improved tax system and protect vulnerable taxpayers
7.Reduction of corporate income tax rate from 30% to 25% over the next 2 years and elimination of earmarked taxes on companies to be replaced with a harmonised single levy at a reduced rate.
8.Elimination of minimum tax on loss-making companies and those with low margins
9. Grant of input VAT credit to businesses on assets and services to reduce cost of investment and improve competitiveness
10.Redesign of the personal income tax band and rates, VAT and Capital Gains Tax to be progressive while protecting the poor
11.Changes to permit the payment of taxes on foreign currency denominated transactions in naira to reduce the pressure on the exchange rate and simplify compliance for businesses.
12.Proposal to repeal over 50 nuisance taxes and levies, and harmonise the remaining taxes to a single digit
13.Equitable basis for VAT revenue sharing to ensure that states without many headquarter companies are fairly treated and recognised for their economic contributions
14.Rationalisation of tax incentives to reduce uncertainty and provide a level playing field for all investors
15.A new National Fiscal Policy to set the framework for fair taxation, responsible borrowing and sustainable spending.

Without a doubt, these Tax-reform Bills have been thoughtfully and carefully designed in alignment with President Tinubu’s agenda to remove all obstacles impeding business growth in the country, promote small businesses and the poor, it is strange that Senator Ali Ndume, who purports to be speaking for the people will stand in opposition to them, even when he confessed to having not read them. If he has not read the bills, I doubt that he read a newspaper editorial, which quoted the Chairman of the Reforms Committee to have explained that “the reforms are geared towards correcting the structural imbalances in the tax system which has seen the poor overburdened with taxes while the elite and middle class routinely evade, avoid, or underpay taxes”.

Senator Ndume might need to familiarise himself with what is driving the reforms and the proposals that have been laid out, which include consolidating the different ‘nuisance taxes’ taxes and levies, which some have put at 62 official and 200 unofficial taxes into a streamlined system of 8 taxes to eliminate unnecessary financial strain on citizens while ensuring a more efficient revenue collection process. The committee is also pushing for a constitutional amendment to limit the total number of taxes on individuals and businesses to a single-digit. The objective, it says, to provide greater financial stability and predictability for taxpayers, fostering a more conducive business environment. Apart from that are the amendments to the withholding tax regulation, with businesses earning below 50 million Naira exempted from this tax, to provide relief for small companies and reduce the tax burden on emerging enterprises to engender growth of SMES, which play a central role in providing employment and the development of the economy.

Estimates from the Federal Inland Revenue Service (FIRS) a few years back had it that out of 70 million taxable adults in Nigeria, only 14 million pay tax, with 96 percent of those who do so through the Pay-As-You-Earn (PAYE) system, which is an indication that most of those outside the formal system don’t pay tax. Yet, a report listed Nigeria as home to almost a thousand billionaires (computed in naira), out of which only 214 pay taxes of N20 million and above. If any proof is needed for allegations of evasion and gross underpayment of personal income taxes, that must be it. President Tinubu’s bold decision to resolve the challenges that confront the tax administration system to improve Nigeria’s tax-to-GDP ratio, increase non-oil revenue generation, attract investment, support businesses and strengthen the economy deserves all the support it can get, especially from the Governors and the National Assembly. Senator Ndume will do well to rally support for the bold initiatives of President Tinubu, study the Tax Reform Bills and work with his colleagues for speedy passage so that Nigerians can take advantage of the opportunities they are designed to unlock.

Sunday Dare
Special Adviser to the President
(Public Communication & Orientation)

Share on Facebook